Would Provide Tax Credits To Investors in Emerging Technology Businesses
TRENTON – Legislation sponsored by Senator Fred Madden, Majority Leader Loretta Weinberg and Senator Paul Sarlo that would provide a tax credit incentive for investment groups and individuals to provide capital to emerging technology businesses cleared the full Senate today.
Also known as the “New Jersey Angel Investor Tax Credit Act,” the bill (S-581) would create specific gross income and corporate business tax credits for start-up investments of up to $500,000 made in New Jersey-based high-tech and biotechnology companies. So-called “angel investors” are individual entrepreneurs – or groups – who provide the massive capital investments that start-up technology businesses need to get up and running.
“In order for New Jersey to remain competitive in attracting high-tech and biotechnology companies, we must ensure that our policies remain cutting edge,” said Madden (D-Gloucester/Camden). “Paired with our highly skilled workforce, this program will provide the boost we need to attract investment to the Garden State, which will help to grow our economy and create high-paying jobs for our residents.”
“The capital provided by equity investors can help create the kinds of new and innovative technologies that have made New Jersey a world-wide leader in the past,” said Weinberg (D-Bergen). “The economic climate in New Jersey is still not satisfactory and we need take action now to fix it. These kinds of tax credits are really a matter of common sense. They provide the right kind of incentive to get people to invest in New Jersey’s science and technology driven businesses, in turn creating much needed jobs.”
According to a 2008 report from the Angel Capital Education Foundation, more than 20 states have implemented programs to attract or retain investment capital through income tax credits in the past decade with the belief that the reduced risk and cost of investing will encourage more entrepreneurial activity in high-growth small businesses and ultimately attract investment dollars, create jobs, and contribute to the economic growth of the state.
“Taking an idea from the drawing board to reality takes talent and perseverance on one hand, and money in the other,” said Sarlo (D-Bergen/Passaic). “Without ‘angel investors,’ many of the world’s great advances would still just be ideas. If we are to grow economically, we need to provide the incentive for investors to reach out and connect with those ideas.”
Because the science and technology sectors have a high potential for growth and are identified as creators of high-paying jobs, they are an ideal candidate for sector specific tax credits. New Jersey has historically been one of the top destination states for science and technology companies. However, other states have been gaining ground in recent decades. This bill would help spur investment and growth in science and technology, allowing New Jersey to maintain its position as a hub for these sectors.
The measure now heads to the Assembly.